Q.Identify, which of the following is true at the Break Even level of Income. (Choose the correct option) Options : (A) Slope of Consumption Curve = Slope of Saving Curve (B) Average Propensity to Consume (APC) = Average Propensity to Save (APS) (C) Slope of Saving Curve = Unity

The break-even level of income is the point where consumption exactly equals income, meaning $C = Y$. At this point, the entire income is consumed and saving is zero ($S = 0$).

Since $C = Y$ at break-even, we can write:

This is the defining characteristic of the break-even point.

Let's verify why the other options are incorrect:

• (A) The slope of the consumption curve is the marginal propensity to consume (MPC), and the slope of the saving curve is the marginal propensity to save (MPS). Since $\text{MPC} + \text{MPS} = 1$ always (not just at break-even), and both are typically constant, this equality doesn't hold unless both equal $0.5$, which is not a general property of break-even. …

The break-even point in consumption theory is the level of income at which a household or economy consumes exactly what it earns. There is no saving and no dissaving; the consumption function intersects the 45° line (where $C = Y$).

To see which statement holds at this point, recall what break-even means algebraically. If income is $Y$ and consumption is $C$, then at break-even:

Since saving $S = Y - C$, we have:

Now examine each option in turn.

Option (A): Slope of Consumption Curve = Slope of Saving Curve

The slope of the consumption curve is the marginal propensity to consume, $\text{MPC} = \frac{dC}{dY}$. The slope of the saving curve is the marginal propensity to save, $\text{MPS} = \frac{dS}{dY}$. We know that $\text{MPC} + \text{MPS} = 1$ always (since any additional rupee of income is either consumed or saved), so $\text{MPC} = \text{MPS}$ would require both to equal $0.5$. This is not a general property of the break-even point — it depends on the specific consumption function. The break-even condition tells us nothing about the slopes.

Option (B): Average Propensity to Consume (APC) = Average Propensity to Save (APS)

The average propensity to consume is $\text{APC} = \frac{C}{Y}$ and the average propensity to save is $\text{APS} = \frac{S}{Y}$. At break-even, $C = Y$ and $S = 0$, so:

These are not equal.

Option (C): Slope of Saving Curve = Unity (1) …